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Lee County’s spending could increase, creating a projected $33.8 million deficit, as government workers prepare for pay raises and commissioners consider tax hikes.

The estimated shortfall amounts to about $3.8 million more than Lee’s current deficit, Assistant County Manager Pete Winton said.

Reserves, built up during Lee’s real estate boom and corresponding property tax windfall, were used to support operating deficits over the last four years. That stockpile is set to just about run out at end of 2014.

Commissioners will hear from Lee’s clerk of court, supervisor of elections and tax collector on Monday, as they prepare to pass a budget Sept. 18 for the fiscal year that starts Oct. 1.

Lee’s sheriff’s office, Winton said, is behind this year’s growing deficit. The sheriff’s budget is set to increase by $4.8 million.

“I think it’s important to point out had budgets been flat, it would have been less than $30 million,” Winton said. “But we’ve got the full sheriff’s budget increase in there.”

Expenses directly under the commission’s purview will drop by about $2 million next year, because Lee’s emergency airlift program, Medstar, was outsourced. After mismanagement shut down the 34-year-old helicopter service in August, commissioners contracted Air Methods to take over 911-air support.

Income will jump by an estimated $2 million because commissioners this week increased charges for an ambulance ride by as much as 30 percent.

The sheriff’s office plans to give every employee a 3 percent pay raise in the upcoming year. Last year, nonunion deputies and staffers received $2,400 bonuses.

Following suit, Supervisor of Elections Sharon Harrington and Property Appraiser Ken Wilkinson plan on raising the pay of their employees by 3 percent.

Harrington could not be reached for comment. Her budget is set to add to Lee’s general fund by $210,868 next year, according to county documents.

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Wilkinson said the cost for pay raises in his office will be split between 90 taxing authorities in Lee. It will not place an additional burden on Lee’s general fund, he said.

Clerk of Court Linda Doggett said her decision on pay raises depends on the economy. Regardless, she said, the dollars would come out of her budget, which is set for a slight increase in general fund expenses of $21,452.

Clerk of court employees collected $500 bonuses in 2011/12, according to documents.

Lee’s estimated $33.8 million shortfall doesn’t include a pay raise for employees under the commission’s control.

Commissioners in August, however, will consider pay raises for the 2,500 or so employees who work under them, Winton said.

“I think our employees are looking for us to have a discussion about it, since our sheriff and other constitutionals have already made comments,” Commissioner Tammy Hall said. “Whether we do it or not, I can’t answer that; but we should look at it and what the impact would be.”

“The cumulative impact of everything we’re talking about is significant,” Mann said. “What’s really frustrating to me is you cannot talk about raising taxes to accommodate pay raises for all of these employees, because you first have to talk about raising taxes to close that $33 million deficit.”

Pay, for most general employees, has been frozen the past five years.

But some of their bosses — four of Lee’s highest ranking staffers — collected pay raises and promotions earlier this year.

Human Resources Director and Assistant County Manager Christine Brady received the largest increase at $18,687, bringing her salary to $112,125. Assistant County Manager Pam Keyes collected the fewest extra dollars, at $12,000. Her pay stands at $130,000 per year.

Money hunt

Commissioners will consider increasing surcharges on electric bills and property tax hikes as a means to boost income.

Lee would collect an extra $7.3 million by maxing out surcharges on Florida Power & Light and Lee County Electric Cooperative bills.

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An estimated $4 million of that $7.3 million would come from FPL customers. FPL serves 237,000 customers throughout Lee but only those in unincorporated areas would pay an increase, FPL spokeswoman Sarah Gatewood said.

Lee commissioners struck a deal with FPL in 1997 that levied a 3 percent surcharge on electric bills.

In exchange, commissioners agreed not to sell electricity to customers – ensuring FPL wouldn’t have to compete with Lee County. Lee produces 57.3 megawatts of electricity at its trash incinerator, according to the company that operates Lee’s waste-to-energy facility.

Under a proposal commissioners will consider in August, Lee could increase FPL surcharges by 50 percent – hiking the franchise fee residents see on their bills to 4.5 percent, according to Winton and county documents.

Alternatively, commissioners could raise the surcharge by a lesser amount – between 3 and 4.5 percent.

LCEC customers do not pay a surcharge. But commissioners could levy as much as 4.5 percent on bills that go out to 87,000 customers in North Fort Myers, Lehigh Acres and Pine Island, according to county documents and LCEC.

The surcharge would send an estimated $3.3 million into county coffers every year, according to documents. But it would take longer to approve surcharges, because county officials would need to draft a franchise agreement with LCEC first, Winton said.

“Although we don’t like to be a tax collector, it is well within the rights of governmental bodies to have that franchise fee and have us collect it,” LCEC spokeswoman Karen Ryan said.

Commissioner Larry Kiker said Lee needs to consider increasing franchise fees, as it would unburden property taxpayers, who pay a large portion of local government expenses.

“I certainly don’t think that’s going to be the answer for addressing the shortfall the county faces,” Kiker said. “But I think it’s correct we look for different revenues sources that are a little more consistent so everything doesn’t come down on property owners; I’m interested in that.”

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Commissioners were presented with options to increase electric surcharges in January 2012, but declined to pursue them.

Variables

Lee’s deficit could decrease, should state-mandated Medicaid contributions drop, Winton said. State officials anticipate a $1 million decrease from earlier projections, he said. Medicaid is a social healthcare program for the poor and disabled. State and county coffers pick up its tab.

Conversely, legal liabilities and other state mandates could prove costly, Kiker said. The sheriff’s share of pension costs will grow by $2.4 million next year. General employee pension costs are set to increase by $2.2 million, according to county documents.

Lastly, Lee could always raise its property taxes or reallocate a portion of taxes levied to buy conservation lands. Either or both measures could help its shortfall.

“There are a lot of things on the table,” Hall said. “We’re going to have to decide which combination of those things we’re going to look at.”

With Lee on the tail end of a recession, and unemployment rates still relatively high, Mann said, commissioners need to focus on cutting costs. “I am very disappointed that so many people seem ready to throw in the towel and say, ‘There’s nothing more we can do, the only possible answer is to raise fees and taxes.’ I have not arrived at that point.”